The Federal Reserve released its latest quarterly "Z.1 Financial Accounts of the United States" statistical survey (a.k.a. "Flow of Funds") late last week. Among the 4 tables it includes on money market mutual funds, the Fourth Quarter 2023 edition shows that Total MMF Assets increased by $215 billion to $6.358 trillion in Q4'23. The Household Sector, by far the largest investor segment with $3.806 trillion, saw the biggest asset increase in Q4, followed by Nonfinancial Corporate Businesses. The Fed's latest Z.1 numbers, which contain one of the few looks at money fund investor segments available, also showed noticeable increases for the Other Financial Business (formerly Funding Corps) and Mutual Funds categories in Q4 2023. (Note: There's still time to register for our Bond Fund Symposium, which is March 25-26 in Philadelphia. We hope to see you in Philly!)
Rest of World, Private Pension Funds, Exchange-traded funds, State & Local Governments and Life Insurance Companies categories saw small asset increases in Q4. The Nonfinancial Noncorporate Business category was the only one to stay unchanged and the Property-Casualty Insurance and State and local govt. retirement funds categories saw assets decreases last quarter. Over the past 12 months, the Household Sector, Other Financial Business, Nonfinancial Corporate Business, State & Local Governments, Private Pension Funds, and Exchange-traded funds categories showed the biggest asset increases, while Property-Casualty Insurance and State and local govt. retirement funds saw the biggest asset decreases.
The Fed's "Table L.206," "Money Market Mutual Fund Shares," shows that total assets increased by $215 billion, or 3.5%, in the fourth quarter to $6.358 trillion. The largest segment, the Household sector, totals $3.806 trillion, or 59.9% of assets. The Household Sector increased by $117 billion, or 3.2%, in the quarter. Over the past 12 months through December 31, 2023, Household assets were up $725 billion, or 23.5%.
Nonfinancial Corporate Businesses, the second-largest segment according to the Fed's data series, held $916 billion, or 14.4% of the total. Assets here increased by $34 billion in the quarter, or 3.9%, and they've increased by $176 billion, or 23.8%, over the past year. Other Financial Business was the third-largest investor segment with $584 billion, or 9.2% of money fund shares. This category jumped $34 billion, or 6.2%, in the latest quarter. Other Financial Business, which we believe includes Securities Lending, has increased by $179 billion, or 44.0%, over the previous 12 months.
The fourth-largest segment, Private Pension Funds held $240 billion (3.8%). Mutual Funds (a recent addition to the tables), was the 5th largest category with 3.7% of money fund assets ($235 billion); it was up by $18 billion (8.3%) for the quarter and up $8 billion, or 3.7% over the last 12 months. The Rest of World remained sixth place in market share among investor segments with 2.9%, or $183 billion, while Nonfinancial Noncorporate Business held $139 billion (2.2%), Life Insurance Companies held $83 billion (1.3%), State & Local Governments held $81 billion (1.3%), Exchange-traded Funds held $39 billion (0.6%), Property-Casualty Insurance held $33 billion (0.5%), and State & Local Govt Retirement held $19 billion (0.3%) according to the Fed's Z.1 breakout.
The Fed's "Flow of Funds" Table L.121 shows "Money Market Mutual Funds" largely invested in “Security Repurchase Agreements” with $2.666 trillion, or 41.9% and "Debt Securities," or Credit Market Instruments, with $3.415 trillion, or 53.7% of the total. Debt securities includes: Open market paper ($302 billion, or 4.7%; we assume this is CP), Treasury securities ($2.270 trillion, or 35.7%), Agency and GSE-backed securities ($708 billion, or 11.1%), Municipal securities ($130 billion, or 2.0%) and Corporate and foreign bonds ($6 billion, or 0.1%).
Another large MMF position in the Fed's series includes `Time and savings deposits ($289 billion, or 4.5%). Money funds also hold minor positions in Miscellaneous assets ($-18 billion, or -0.3%) and Foreign deposits ($5 billion, 0.1%). Note: The Fed also lists "Variable Annuity Money Funds," which currently total $46 billion.
During Q4, Debt Securities were up $534 billion. This subtotal included: Open Market Paper (up $9 billion), Treasury Securities (up $502 billion), Agency- and GSE-backed Securities (up $18 billion), Corporate and Foreign Bonds (down $3 billion) and Municipal Securities (up $8 billion). In the fourth quarter of 2023, Security Repurchase Agreements were down $283 billion, Foreign Deposits were down $6 billion, Time and Savings Deposits were down by $4 billion, and Miscellaneous Assets were down $27 billion.
Over the 12 months through 12/31/23, Debt Securities were up $1.393 trillion, which included Open Market Paper (up $48B), Treasury Securities (up $1.206T), Agencies (up $128B), Municipal Securities (up $12B), and Corporate and Foreign Bonds (down $1B). Foreign Deposits (up $4 billion), Time and Savings Deposits were up $99B, Securities repurchase agreements were down $311 billion and Miscellaneous Assets were down $51B.
The L.121 table shows `Stable NAV money market funds with $5,725 billion, or 90.0% of the total (up $226.9 or 4.1% in Q4 and up $1.136 trillion or 24.7% over 1-year), and Floating NAV money market funds with $633 billion, or 10.0% (down $12.3B or -1.9% in Q4 and down $1B or -0.2% over 1-year). Government money market funds total $4.920 trillion, or 77.4% (up $159.1B or 3.3% in Q4 and up $856B or 21.1% over 1-year), Prime money market funds total $1.306 trillion, or 20.5% (up $47.7B or 3.8% in Q4 and up $266B or 25.6% over 1-year) and Tax-exempt money market funds $131B, or 2.1% (up $7.8B or 6.3% in Q4 and up $12B or 10.3% last year).
The Federal Reserve made changes to the Z.1 tables 2 years ago. Describing a "Money market funds sector data source change," the report says, "The money market mutual funds (MMF) sector (tables F.121 and L.121) has been revised beginning 2010:Q4 to reflect a change in data source to Securities and Exchange Commission Form NMFP. The level of assets and shares outstanding of the sector have increased due to the inclusion of private placement MMFs in the source data. Changes in the level due to changes in the data source in 2010:Q4 are recorded as other volume changes in the Financial Accounts."
On "Mutual funds sector holdings of money market funds," Z.1 tells us, "The mutual funds sector (tables F.122 and L.122) has been revised beginning 2010:Q4 to reflect holdings of money market funds not previously reported on the tables. In addition, holdings of repurchase agreements, commercial paper, corporate bonds, and miscellaneous assets have been revised. Additional and revised holdings are estimated using data from Morningstar and Investment Company Institute.... The exchange-traded funds sector (tables F.124 and L.124) has been revised beginning 2010:Q4 to reflect holdings of money market funds not previously reported on the tables."
